When Apple launched Apple Music in June 2015, many people confidently predicted that the David and Goliath struggle between Apple and Spotify would favour Apple with its colossal financial and marketing power combined with an installed base of hundreds of millions of iOS devices.
Against all expectations Spotify has not only managed to keep ahead of Apple Music but the gap between the two streaming services has gradually widened from 20 million when Apple Music was launched to around 40 million subscribers in June 2018.
Spotify reaches 180 million users with 83 million Premium subscribers
Spotify, which went public in April this year, has constantly innovated and has also ensured that it has near ubiquitous device support and availability in all the major markets around the world. Yet despite its consistent growth Spotify is still losing money and posted losses in its second quarterly earnings report as a public company with no prospect of getting into the black for the foreseeable future.
Spotify goes public
Spotify grows users, revenues and losses
By June 2018, the company had 180 million monthly active users (MAU) with 83 million Premium subscribers which means that more than 4 in 10 Spotify users are actually paying for the service, up from less than 3 in 10 in 2015.
Daniel Ek, Spotify’s CEO said, ‘We don’t see any kind of meaningful impact of competition. In fact, when we look at this, we don’t really think that this is a winner-takes-all market.’
Another significant factor in Spotify’s success is that it is managing to keep its subscribers on board. The company’s Premium subscription churn, i.e. the cancellation rate of its paying customers, declined from 7.7% in 2015 and 5.5% in 2017 to below 5% in the first three months of 2018, indicating a high degree of customer satisfaction.
